If you’re filing Chapter 7 or Chapter 13 bankruptcy in New York or any state in the US, there are some basic rules of law and thumb you should follow. After all, your financial future is at stake. If you make mistakes, the process can drag on, fees will go up, and property will be lost. It’s not meant to scare you, but everything from documentation to planning need to be good.
Your best bet is professional counsel, bankruptcy attorneys specializing in Chapter 7 and Chapter 13 cases in New York.
So why include Chapter 13? Technically, you may not lose any property. Chapter 13 bankruptcy in New York buys you time to pay back debts over 3-5 years in monthly installments. However, if you fail to pay, you may lose property.
Chapter 7 bankruptcy is the most common bankruptcy form used. Let’s go over the basics of what Chapter 7 bankruptcy is in New York, and then go over exempt and nonexempt property.
What is Chapter 7 Bankruptcy?
It’s a liquidation proceeding. You are discharging debts, giving property to a trustee, and paying back what you can. It’s a fresh start for you economically. So why a trustee? Technically, your creditors still have rights to some of your property. Your property can be used to pay them back in some cases. The good news is you have the option of buying back property from the trustee after you lose it.
Exempt Property in Chapter 7 Bankruptcy
There are many exemptions which work to your benefit, namely big items like homes and cars. What’s exempt depends on the price of your items. The more it’s worth, the more chance you may lose it after filing Chapter 7 bankruptcy in New York. If, for example, you are single and own a home valued over $100,000, that property is not exempt. Most states in the US draw the line around $100,000 for both families and individuals, sometimes even if your retired or disabled. If you are retired or disabled, you have a better chance of keeping valuable property.
One benefit of hiring bankruptcy attorneys in New York is the expertise you receive for the process. For example, tax refunds and earned income credits are not exempt. However, the time at which you file for Chapter 7 bankruptcy comes into effect here–you may be able to keep these if you file later.
There are other ways to save money on nonexempt property. If you have nonexempt property, you can actually sell it for items which are exempt, such as food, furniture, or clothing.
That isn’t to say you should buy an expensive couch or diamond rings, but if you’re frugal in spreading your money out you can save some of your money.
Other Rules on Exempt Property for Chapter 7 Bankruptcy
There are other rules when filing for bankruptcy you should be aware of before making big decisions. While hiring professional bankruptcy attorneys in New York is a must, be clear on what you expect and what the attorney wants in terms of fees.
You should also not try hiding money. If you give valuable property to family members of friends within 1 year of filing, you might end up losing this in bankruptcy court and being charged with a crime.
When It’s Time to File for Chapter 7 Bankruptcy in New York
Filing bankruptcy is a big decision, so don’t make all your choices alone. Hire professional bankruptcy attorneys who can walk you through documentation, exemptions, filing, and beyond.